COVID-19

As pandemic worsens, will restaurants need to pull back again?

Marielle Segarra Jun 24, 2020
Heard on: Marketplace
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A Los Angeles restaurant worker wears a face covering and gloves for handling takeout orders, accompanied by pandemic-safety instructions. Mario Tama/Getty Images
COVID-19

As pandemic worsens, will restaurants need to pull back again?

Marielle Segarra Jun 24, 2020
A Los Angeles restaurant worker wears a face covering and gloves for handling takeout orders, accompanied by pandemic-safety instructions. Mario Tama/Getty Images
HTML EMBED:
COPY

As virus cases surge in Arizona, Florida, California, Texas and other states, the conversation has begun about whether it makes sense to at least partially close businesses like restaurants again.

What would that look like?

If you run a restaurant, you’d have way more food than you’d need to fulfill takeout orders, to start.

“What do you do with [food] long-term? You could try to sell it off to supermarkets,” said Mike Haller, a manager at UL Everclean, which advises restaurants on food safety.

Or you could sell the food directly to consumers — turning your restaurant into a little grocery store. You could also freeze the food and hope it stays good for a while.

Also, you’d have to call your suppliers and tell them actually you won’t be needing those 10 cartons of tomatoes, and you don’t know how many you need.

“Most of these food facilities, they go off of same-store sales so they can look back in history and find out like, well, we need so many pounds of shrimp this week. And with these disruptions, that makes it an absolute nightmare for knowing what to order because these are unprecedented times,” Haller said.

Shutting down again would also hurt sales. And a restaurant is not going to make up the difference with takeout.

All of this puts small restaurants in particular at risk. 

Vlad Rikhter is CEO of the tech platform Zenput. It advises big restaurant chains like Domino’s and Sweetgreen. He said if you own one location and it’s in a place under mandated lockdown, that could wipe you out. “Especially if you just ordered $10,000 worth of inventory, and you had to toss $5,000 of it out because you can’t hold it for three, four, five weeks, or whatever the time period is.”

Rikhter said the big chains would be in a better position to get through another round of lockdowns because they have lots of cash and lots of locations. 

COVID-19 Economy FAQs

What’s the latest on the extra COVID-19 unemployment benefits?

As of now, those $600-a-week payments will stop at the end of July. For many, unemployment payments have been a lifeline, but one that is about to end, if nothing changes. The debate over whether or not to extend these benefits continues among lawmakers.

With a spike in the number of COVID-19 cases, are restaurants and bars shutting back down?

The latest jobs report shows that 4.8 million Americans went back to work in June. More than 30% of those job gains were from bars and restaurants. But those industries are in trouble again. For example, because of the steep rise in COVID-19 cases in Texas, Gov. Greg Abbott, a Republican, increased restrictions on restaurant capacities and closed bars. It’s created a logistical nightmare.

Which businesses got Paycheck Protection Program loans?

The numbers are in — well, at least in part. The federal government has released the names of companies that received loans of $150,000 or more through the Paycheck Protection Program.

Some of the companies people are surprised got loans include Kanye West’s fashion line, Yeezy, TGI Fridays and P.F. Chang’s. The companies you might not recognize, particularly some smaller businesses, were able to hire back staff or partially reopen thanks to the loans.

You can find answers to more questions on unemployment benefits and COVID-19 here.

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